Housing legislation changes
Parliament votes for additional tax on glassed-in loggias
The government intends to stop housing privatization, Anatolii Blyzniuk, Minister of Regional Development, Construction and Public Utilities, told the Verkhovna Rada during the Hour of Questions to Government: “I would like the Members of Parliament to finally decide on the completion of housing privatization, with 92 percent of homes already privatized, leaving 8 percent. It is necessary to put aside all insinuations and make this decision.” He added that the state thus hopes to stimulate Ukrainians to form condominiums.
Tetiana Boiko, utility program coordinator with the public network Opora, told The Day that Boiko has a good point there, that Ukrainians have to be encouraged to step up the privatization process: “Considering that 92 or 96 percent (there are varying statistics) have been able to do so [i.e., privatize their homes. – Author], why can’t the remaining 6 or 8 percent follow suit?” She believes, however, that this initiative can be effective only when followed by a large-scale information campaign, with a sensible privatization deadline.
Oleksii Honcharuk, president of the Defrauded Investors Relief Association insists Boiko’s initiative is “absolutely incomprehensible from the legal point of view… Why should those 92 percent be able to privatize their homes without any terms and conditions like deadlines? Why should the state decide to deprive the remaining eight percent – people who haven’t been able to do so due to some or other reasons – of this right?”
Worse so, at the end of last week the Verkhovna Rada passed a bill proposed by President Viktor Yanukovych, amending housing legislation, banning the usage of homes “for commercial purposes.” The head of state also criticized what he saw as a legal conflict. In particular, he believes the clause defining “floor space” and “total floor space,” as well as the procedures of determining their size, does not conform to the objective of this law, allowing frequent alterations of these ratios, thus changing the total area of these real estate entities, each time requiring inventory of the housing stock at the taxpayer’s expense. Therefore, the ratios set forth in the bill passed by parliament on October 6, to be used when assessing the floor space of loggias, balconies, verandas, and terraces (and which ratios are to be determined by the central executive body) are unacceptable. The head of state is convinced that these ratios must be established by law. The VR agreed and from now on the area of the balconies and terraces will be determined using 0.3 ratio; that of loggias, 0.5; glassed-in balconies, 0.8; verandas, glassed-in loggias and cold storage rooms, 1.0.
The Ministry of Regional Development and Construction has hurriedly assured that the above amendments won’t affect Ukrainians in any serious way. Its official website reads: “On January 1, 2006, State construction standards set forth the final total space floor formula which is still effective. It includes the rooms, glassed-in and open balconies, loggias, and storage rooms, the area of which is calculated in keeping with set ratios. Two of the three ratios were practiced during Soviet times, and in 2006 the glassed-in balcony ratio was added. The principle of determining total floor space hasn’t changed since then. However, the definition of total floor space and the formula of its calculation were absent in the Housing Code that has been in effect since 1983, albeit with amendments.”
Practically it means, explains the ministry, that if the floor space of all rooms in an apartment is 35 square meters, then the total floor space subject to rent is determined as follows: 35 x 1 + 2 x 0.3 = 35 + 0.6 = 35.6 m2. This is precisely the formula that has been used since at least January 2006. In other words, there will be no rent increase. “In fact, the amendments to Article 6 of the Housing Code simply legally seal the current practice and rent-calculating procedures. The manner in which total floor space was calculated hasn’t changed, therefore rent is levied on the same floor space,” stressed Anatolii Blyzniuk.
Rent-payers, however, have exactly the opposite view on the matter. Mykhailo Kaltaheiser, head of the First House Association of Condominium Co-owners, is convinced that the amendments to the Housing Code President Yanukovych submitted to the Verkhovna Rada, along with his veto on the bill passed by Parliament, will result in higher rent. He agrees that the President’s ratios are almost the same as the currently effective ones, but that there are substantial distinctions: “First, the current ones are regulated not by the laws of Ukraine but by bylaws. Second, there is no official notion of ‘glassed-in balcony’ in the construction regulations or even those of the BTI [Ukr. acronym of the Bureau of Technical Inventory, actually the Recorder of Deeds], simply because all glassed-in balconies in Ukraine are homemade products.”
As a result, continues Kaltaheiser, rent for all apartments with glassed-in balconies will be recomputed by the BTI using the new ratio: 0.8. In other words, the owner of a 35m2 apartment, after having a balcony glassed in at his own expense, will have to pay for 36.6 rather than 35.6 square meters.
